Workshop Session I: Public Expenditure Financial Accountability (PEFA) Assessment
Frans Ronsholt, Head, PEFA Secretariat and Franck Bessette, PFM Expert PEFA
Secretariat
The first session presents the background, objectives and activities of the PEFA program as
well as the content and methodology of the PFM Performance Measurement Framework.
The session also discusses implementation issues and global adoption of the Framework

3PFM Diagnostics in the 1990s• Large amount of PFM work undertaken, – mostly by development agencies – a good deal of knowledge generated.LIMITATIONS• Duplication and lack of coordination led to heavy burden on partner governments.• Not possible to demonstrate if PFM performance is improving over time in a country• Monitoring of PFM reforms focused on inputs and activities, rather than performance

4What is the PEFA program? PEFA Public Expenditure & Financial Accountability Objective: Results orientation in development of PFM systems & harmonization of PFM analytical work Established: in 2001 by seven agencies. Today working in tandem with the 25 members of OECD-DAC Joint Venture on PFM Strategy: Strengthened Approach to support PFM reform, aligned with Paris Declaration

5The Strengthened Approach toSupporting PFM Reform A country-led PFM reform program – including a strategy and action plan reflecting country priorities; implemented through government structures A donor coordinated program of support – covering analytical, technical and financial support A common information pool – based on a framework for measuring performance and monitoring results over time – i.e. the PEFA PFM Performance Measurement Framework

6Implications of the StrengthenedApproach?Focus on improvements in country PFM systems: – Emphasizing country leadership and ownership for result – Common information pool, fewer duplicative diagnostics – Joint donor work in country, reducing transaction costs and creating consistency in analysis – Less emphasis on diagnostics, more on capacity-building – With performance measurement framework, more learning of what works and why

8COMPONENTS OF THE FRAMEWORK A standard set of high level PFM indicators (including revenue, expenditure, procurement, financial assets/ liabilities) – 28 government performance indicators, covering all aspects of PFM – 3 donor indicators, reflecting donor practices influencing the government’s PFM systems A concise, integrated report – the PFM performance report developed to provide narrative on the indicators and to draw a summary from the analysis

9FOCUS OF THE FRAMEWORK

 Focused on central government operations

 but also applicable at sub-national level, special guidelines available Links to other parts of the public sector – Sub-National Governments – Public Enterprises, – to the extent these have implications for Central Government

10STRUCTURE OF THE PERFORMANCE INDICATOR SET C. Budget Cycle PI-11 to 28

B. Cross-cutting features PI-5 to 10 Predictabilit Budget External y and control credibilityscrutiny and Comprehensiveness in Budget audit and Transparency Execution

Accounting, Recording, Reporting

11CALIBRATION AND SCORINGCalibrated on a Four Point Cardinal Scale (A, B, C, D) Reflecting internationally accepted ‘good practice’ Determine score by starting from ‘D’ going upwards Do not score if evidence is insufficient

Arrow ▲ Can indicate an improvement not reflected in a change of the indicator score

12INDICATOR DIMENSIONSMost indicators have 2, 3 or 4 dimensions

 Each dimension must be rated separately

 In total 76 dimension ratings to be determined Aggregating dimension scores to indicators; two methods M1 or M2, as specified for each indicator Intermediate scores (B+, C+, D+) for multi- dimensional indicators, where dimensions score differently

 Introduction with the context for the assessment

 Country background information Evidence and justification for scoring the indicators Country specific issues Description of reform progress and factors influencing it Summary assessment of PFM system impact – bringing the analysis together

14Strengths of the PEFA Framework Rigorous/transparent framework for consistent and objective assessment – fixed content, rating methodology, international standards/accepted good practice Provides a high level overview of all aspects of PFM systems performance – cost-effective Provides a focus for PFM reform dialogue and subsequent analysis of selected subjects Allows tracking of performance changes over time Widely applicable to countries at different levels of development

15Limitations of the PEFA Framework The Framework does NOT provide:

– An assessment of underlying causes for good or poor

performance i.e. the institutional, organizational and human resource capacity factors – An assessment of public fiscal and financial policies – Full details for each PFM topic (refer to specialized drill- down indicator sets)

 Risk of inappropriate application of the Framework –

17Implementation modality Country focus and decision – Application of the PEFA Framework is entirely decentralized to the country level (if, when, how to use Framework) Inclusiveness – All stakeholders can be involved and any agency can in principle undertake any role in its implementation; it does not ‘belong’ to any organization Supported by a neutral body - the PEFA Secretariat – offers support to any user of the Framework without representing a particular interest – does not undertake or finance assessments – support is free of charge

21PEFA Framework adoption Very good progress – globally – By February 2009: Completed in 95 countries, ongoing in a further 8, repeat assessments emerging Increasingly used for Sub-National government – India, Pakistan, Iraq, Brazil, Colombia, Tanzania, Uganda, Ethiopia, Nigeria, Senegal, Switzerland – Guidelines for SN application issued March 2008 High country coverage in many regions – Africa and Caribbean 85-90% of countries – Latin America, Eastern Europe, Asia, Pacific 45-65% Wide stakeholder involvement – About 25 donor agencies involved (leading, financing reference group) – World Bank and EC taking the lead in 85% of all assessments – Government leadership/self-assessment increasing, but not yet the norm 22Publication of Reports Common information pool – facilitated by publication Publicized by the leading organization – usually on a website Hyperlinks placed on the PEFA website – for easy access to all public reports As at April 2009, 52 reports publicly available (out of 77 finalized)

24PEFA Phase III 2009-2011 New Focus: Support to the use of PEFA reports for – Tracking of performance changes over time – Prioritization and sequencing of PFM reforms – Peer learning – Utilization by stakeholders beyond central finance agencies and donors …. and enhancing country ownership / donor collaboration for assessments & subsequent reform formulation / implementation Other objectives will continue as under Phase II: – Support to quality assurance - training, advice, guidance on good practice, peer review and technical maintenance of the Framework = core services of the Secretariat – Monitoring of roll-out & quality ; impact assessment – Expansion of country coverage, espec. MICs and HICs

25Support to assessment managersSupport tools on the website (www.pefa.org): List of completed, ongoing and planned assessments – updated periodically Links to completed reports, when public

Support on request: Advice / Video-conference briefings to country teams on assessment planning List of consultants with PEFA experience Review of terms of reference Quality reviews of draft assessment reports